The risk of deflation in the UK grew today after a key measure of inflation slumped to 0% for the first time in half a century.
According to the Bank of England, the Retail Price Index (RPI), which includes housing costs, fell from 0.1% in January to 0% last month, the first time the measure had hit zero in 49 years. Deflation occurs when the annual inflation rate falls below 0% and the RPI, as recently as July last year, stood at 5%. However, any imminent deflation risk has been put on hold after the Bank also confirmed the Consumer Price Index (CPI), which excludes mortgages, had risen from 3% to 3.2%, a widely unexpected move. Because CPI is more than 1% above the Government's 2% target, the Bank's Governor...
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